>> from bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line," the intersection of business and economics with a mainstream perspective. today, bank of america agrees to a multimillion dollar mortgage settlement. then kansas city fed president says the u.s. economy is strong enough for a rate hike. and get ready for 12 days and nights. ♪ to our viewers here in the united states and those of you joining us around the world, welcome. we have full coverage of the stocks and stories making

headlines today. phil mattingly reports on president obama's options in iraq. with amarx is in irbil focus on iraq passes oil fields. with theinterview kansas city fed president. but first, on this thursday, we begin with bank of america's rectal -- record settlement. the bank has agreed to pay nearly $17 billion to settle allegations that misled investors in the sale of mortgage bonds. it is the toughest penalty yet related to loans that fueled the financial crisis. >> we did the best we could. i am proud of the fact we established the working group the president set up in january 2012. the chase deal, the city deal, and this record-breaking deal with bank of america are all coming out of the work of this national working group that president obama set up in january 2012. he does not get mentioned a lot in the stories, but he put my

office and others together and we started ramping up and that is why we are getting these record-breaking settlements. >> bloomberg reporter keri geiger has been following and she is here with me now. this is seismic, isn't it? >> this is a big settlement for bank of america but we should probably step back and put it back in perspective. since 2010, bank of america has paid about $65 billion for settlements related to mortgages. a lot of that was due to this acquisition of countrywide financial, which we know was the largest subprime mortgage issue work in the country prior to the financial crisis. today, we are really having the final push for bank of america to clear out all of its legal liabilities with the 17 billion dollars settlement. >> the u.s. attorney general eric holder said, "these financial institutions knowingly, routinely, falsely, and fraudulently marketed and sold these loans as sound and

reliable investments. these were actions that took place in the last decade." where there are no red flags at the time? havelot of the issues that come up with these mortgage settlements, jp mortgage -- j.p. morgan settled last year, and it was really a last -- lack of and shelling out a lot of really toxic products to other banks, which is essentially what they got in trouble for. it is less to do with selling bad mortgages to the american public and more to how they package of these up and sold them out to other institutions. >> it seems like, you mentioned the phrase "risk analysis." shouldn't that be part of the template? >> it should now. post financial crisis, risk management has changed considerably on wall street. just the way they look at how loans, sitting on a balance

sheet, and how risk is looked at . but we are in a heightened market and banks will look for ways to make money where they can make money. there are a lot of lessons learned from the financial crisis and the settlements, but there still will be more penalties and more issues on these other legal problems for the banks to come. one was quick to point out, fine, we are dealing with this, but now it is time to look forward. >> bank of america is definitely looking forward. this is brian warner hands -- brian moynihan's last big look. take of america and allowing it to regain substantial profitability. >> federal officials acknowledge the settlement does not release individuals from individual charges. inc. ofnot shield america from possible criminal prosecution. does that mean we could potentially see officials led away in handcuffs? >> i don't think so. a lot of the statute of

limitations on criminal charges or what they can charge individuals with have expired. however, like what we reported yesterday with the former head and cofounder of countrywide financial, one of the worst , angeloin the market mozilla is likely to be sued by the u.s. attorney in los angeles by civil charges very similar to what bank of america paid out today. >> countrywide, just for historical context, it was the ink the company took back 2008. countrywide's role in all this was what? >> at the time, it was the largest issuer of subprime mortgages in the country. they really drove the growth in that market. they had a wave of defaults that hit them in 2007. their stock price went way down and bank of america at the time

saw an opportunity to buy an asset and wanted to get into that business. when bank of america acquired that, he acquired all of the liabilities associated with that. that is really a lot of what they are paying out today. the issues related to what countrywide did prior to the financial crisis. >> keri geiger joining me here in studio. thank you so much. i appreciate it. in other news, iraq has the fifth largest proven oil reserves in the world. but the continued chaos has now reached part of the country where that oil is produced. we report on how factual fighting and the new type line may be redrawing the political map. iraq the chaos of northern , it is not only religious minorities that are under threat. it is also the region's oil industry. and that is most evident here in the city of kirkuk. was theecades, kirkuk

city as far as revenue. kurdish a -- a kurdish governor. >> we are not frightened but we are concerned. i don't think we have 10 families in the city. >> he says the central government is doing little to help the city, either militarily or financially. >> it is like pulling teeth. if you don't follow, you will not be able to get a penny. finance,s bank of --kirkuk's dynamic. >> it is a historical city. a few weeks ago, the army fled this region. the state would naturally include the city.

despite protest from baghdad, the regional government recently completed its own pipeline to turkey. fighters like these seized control of several nearby oil facilities. in june, the entire region pumped an average of 360,000 barrels of oil a day. thatquivalent of 90% of could travel along the newly tolt pipeline from kirkuk turkey. most of kirkuk's oil infrastructure remains in the hands of an oil company. not drop is for sale right now. we spoke to several businessmen in the city. were told the isis presents to the south is driving kirkuk closer to kurdistan and away from baghdad. >> we have to think about how iraq is governed, how people will accept the new government, and what kind of say they have in it. unfortunately, we still see the same old faces.

that is not very encouraging. >> given the new clout to the city, increasing isolation from the central government could prove profitable. >> my colleague joins us now live from irbil. why can't this be shipped? >> there are a series of challenges. in that part of the country, we have isis on the front door of the city. the other problem is the relationship between the iraqi central government and the kurdistan regional government. that is why the production around their stock. pipelineave its own leading to turkey. they are shipping it via tankers. ,> joining us live from irbil iraq. thank you. u.s. forces set foot in syria earlier this summer as far -- as part of a failed operation to

save an american journalist held by islamic state militants. phil mattingly joins me now. --st on this record is rescue operation, what went wrong? >> the hostages were not there. u.s. officials we have spoken to over the last 24 hours have said they felt the intelligence was good. it was coming from multiple streams. because of that, they deployed more than two dozen military assets, including drones, fixed wing aircraft and modified helicopters for the attack. when they arrived, the islamic militants were there and fighting ensued, but there were no u.s. hostages. james foley was one of the individuals targeted in this, the u.s. journalist who was executed two days ago. a video was shown to dub days ago. also worth noting there were other americans targeted -- two days ago. also worth noting, there were other americans targeted. it is not known whether those in visuals are still alive or if there is a plan to do things going forward. >> have there been any noticeable policy shift by the

obama administration in the wake of the execution? >> the critics of the regional effort out of the obama administration have certainly stepped up their voices in the last 24 hours. i am talking specifically about senator john mccain, the republican from arizona. of howoutspoken critic the obama administration is handling syria particularly. his statement he released yesterday in the wake of the execution was, the obama administration cannot take -- he is calling for increased in syria. from the administration perspective, there has been no indication they are willing to go that route. however, they are continuing their airstrikes in iraq. so far, 84 total airstrikes have taken place and it is not just due to that humanitarian mission. more than 50 have targeted the area around that. questions the moment ago, you -- >>ned other americans

a few moments ago, you mentioned other americans thought to be targeted. any sense whether another rescue operation might be in the planning stages? >> we do not know if anything is actually in the go stage yet. we do know there is a lot of frustration that this story even came out. the white house made very clear last night they had no intention of releasing the fact that this operation took ways or that it failed. defensive -- defense department officials -- white house willing to confirm that actually occurred. we hear the journalists were ready to go with the store yesterday and the white house felt they had no other options. >> phil mattingly joining us from the white house. thank you. up next, we go to jackson hole, wyoming. michael mckee joins us with the start of the annual economic symposium, including highlights of his sitdown interview with the kansas city fed president. a look at the grand mountains on this thursday.

"bottom line" continues in just a moment. ♪

>> we continue our focus on the federal reserve as bankers and economists gather at the annual jackson hole, wyoming, symposium. haeckel mckee is there. michael? michael mckee is there. michael? knowing interesting people on the lower manhattan at the new york stock exchange and elsewhere are wondering what kinds of clues they will get for the fed future policy. they suggested a more hawkish view, maybe an earlier rate rise. one of the people arguing for that is the host here, esther george. i asked her yesterday if she still believes that we need to move sooner rather than later. that will be a function of how the economy performs. that is why the committee has been talking about with the

sized balance sheet, how the normalization will work, how the fed funds rate will respond, how we will control short-term interest rates, and that has been the discussion over the last few meetings with the committee. >> one of the controls for short-term interest rates, overnight reverse repos to put a floor under raikes. there have been a lot of concerns raised about how they worked in practice. have you worried that they may have adverse consequences? >> they could and that has been discussed to make sure we are thinking about not only what value they could bring to us during the process of normalization but what the consequences might be. i think for that reason, you see in the minutes and effort to say we will consider this tool during the normalization process but to be very aware of what those consequences could be in a time of stress. >> when you put it altogether, what will you look for when it is time to decide to raise rates? what will be the trigger for you? tell you thers economy is ready?

>> i think we are getting close to that. of course, the committee will work through this systematically in terms of the process to do that. in my own view, some of the policy benchmarks we looked at and have been looking at for some time are already signaling that we should be above zero interest rate. so we will continue to watch the thatmy unfold, but i think we are getting to a good point. >> do wages have to go up first? >> we have seen wages going up. if you look compared to last year, we have seen wages move up. that shouldnk that be the indicator. so i think we will be looking broadly at how the economy is unfolding. some of the research my staff has done suggests where wages are today relative to past times with similar slack in the labor markets, we may not be so far off track. >> you have also been quoted as

worrying about asset price inflation because you watch farmland prices. farmland prices have started to come down. is that issue off the table now? >> farmland prices have cooled at a high level. that has been in the face of projected declines in income. we will see. i would say more generally, that the issue around the risk of the markets, the pricing of risk, is when you have an environment where there is a strong incentive to reach for yield. that is really what i look at broadly, not just for farmland, but other parts of the market where those incentives exist, i think it is important for policy to take those into account. >> raising rates would obviously solve that problem, mark. the way the economy is going, there is certainly reason to think we could see something earlier rather than later. but she is not ready to commit to that yet. >> michael, fed chair janet yellen, she will be speaking

tomorrow. what does wall street want to hear? >> physically, they want to hear her say we will not raise rates for a while. but they may not get that. this is an academic conference. it looks like they are getting back to their roots here. attendees, 33 come from central banks around the world and 12 of the 17 fed officials are going to be here. it is really concentrated on central-bank policy making and the kind of theories they look at, rather than what janet yellen wants to do next. >> bloomberg's economics editor michael mckee from wyoming. thank you. inhas been relatively calm ferguson, missouri, following the one-day visit of u.s. attorney general eric holder. we are covering this story. what did the attorney general accomplish during his visit? >> he was here for a whole day yesterday. he met with investigators, with the family of the shooting victim, and with prosecutors's and community leaders.

he wanted to heal the wounds of this community has felt for the last couple of weeks and restore calm. we did see a much more calm environment last night and attorney general holder please his visit helps influence that. >> this is unusual. it is rare for an attorney general to go to a hot bod. even robert f kennedy during the 1960's sent deputies to hotspots rather than traveling himself. >> yes. it is quite rare. incidenthow much this and the unrest over michael brown's death has resonated all over the country and even all over the world. this has sort have -- sort of become an international event and required a top official from the white house to come and join and to think about what happened. you, should mention behind we are seeing activity. the national guard is pulling out.

is that correct? x yes. yes. just a few minutes ago, the governor jay nixon ordered the national guard to pull out, partially because things have become much more calm. we have not seen the type of unrest and violence we have seen previously over the last couple of nights. it has been calm. as a result, the national guard will begin pulling out of ferguson. >> bloomberg's toluse olorunnipa joining us from missouri. thank you. be sure to check out the latest edition of "bloomberg businessweek" with a cover story of the ferguson shooting. you can read it on the go with our new businessweek app. we will be right back. ♪

>> welcome back to "bottom

line." we are approaching 26 minutes past the hour. bloomberg television is on the markets. olivia sterns is standing by with the details. >> it is getting pretty exciting. the s&p is within 10 points of --0, trading above 1990 1993. it is up since your show has started. we did get better-than-expected data out of labor markets this morning showing that weekly jobless claims sell more than job -- more than forecast. a speech on labor markets coming out of jackson hole. overall, green on the screen. one individual mover we are watching for you is hewlett-packard. the company posted its first sales growth in three years. that's right. i said it. revenue rose getting a boost from 12% growth in its pc business. so people are actually buying personal computers. whitman has been focusing on outcing costs but it turns

the old bread-and-butter business is actually doing well. finally, quickly, here is what is happening at ebay. the auction site may spin off paypal according to an online publication. carl icahn has been calling for ebay to spin off paypal. we will watch and see what happens. ♪

welcome back to the second half-hour of "bottom line" on bloomberg television. i'm mark crumpton. thanks for staying with us. another challenge. higher down payment requirements. a recent report finds that while down payments for all homes are on the rise, the cheapest and most affordable homes saw about a 79% increase from 2007 to 2013. a professor of real estate and finance in philadelphia joins us this afternoon. professor, welcome back.

good to see you again. >> a pleasure to be here. thank you. >> before we get into the first time homebuyers, there was news that bank of america settlement. bank of america agreeing to pay 17 billion dollars in that settlement with the u.s. government over the bank's role in the sale of mortgage-backed securities in the run-up to the financial crisis. can we draw a line from the effects of the mortgage misconduct outlined i the federal and state officials to the current struggles of first-time homebuyers and others trying to purchase a home? >> there is a line, not a direct line. in thetly, the cautions regulatory environment today respond in part to misconduct that this is in response to. lendinge heightened constraints, particular down payments, which are keeping first-time buyers out of the market. >> about $7 billion announced

today will help revive relief to struggling homeowners. what impact will the settlement have on struggling communities and what impact might it have on the overall housing market? >> it will obviously help the individuals and will help neighborhoods to some degree across the country. but it will have very little impact on the overall housing market. it is a trillion dollar sale and it will not be noticed. >> the national association of realtors says first time purchasers account for 28% of all sales of previously owned homes in june, and that is down from about 40% historically. in the new housing market, the numbers are worse. what is going on? >> it is constraints, mark. the down payment constrained in particular. interest rates of course are very low. housing prices are up, but they are not historically high

relative to read. people do want to still be homeowners third renters, young renters, young folks who are still staying with their parents, want to be homeowners, but they cannot get that down payment. it is constraining them. that is why homeowners rates are at a 20 year low. as professor, the long-term economic impact in the united states if younger buyers continue to find himself shut out of the -- themselves shut out of the market, what do you think that is? >> one aspect of that trend is multifamily strong. you see the numbers. up ing starts are really the multifamily section. i think that is a trend we will see going forward. i think we will continue to see young households struggling to become homeowners. rentership is a trend, virtually. >> can we also -- unfortunately.

>> can we also dry line from the crushing burden of student debt to what we are seeing in the housing market, or perhaps more specifically what we are not seeing? >> for individuals with student debt, that is a real constraint on top of the difficulty of getting a down payment. down payments have doubled. so yes, debt overall, the debt overhangs still from the years of overextension of borrowing. it is still a negative for the overall economy and it is part of the reason why housing is not a major contributor to the economy, despite the good numbers on sales. >> we see institutional investors buying properties and holding them as long-term rentals. how prevalent is this and what is it doing to the number of available properties on the market? newhis is an important trend. the new trend is now being institutionalized. the investor buying search is pretty much over and that is

part of the reason some of the numbers are down this year and why we see housing prices actually increasing but nowhere near the rapid rise of last year. and now we see an institute of institutionalization, this investor >> ownership. i see that as a positive. -- investor class ownership. positive. as a the demand is there and that is an improvement. >> we have a little less than a minute left. i guess for the younger stillial homeowners, you have tight credit standards and tight lending standards. is there any relief for them without banks perhaps taking on to thaten of going back 2007-2008, where they started giving up subprime loans? >> there is really a middle ground. the pendulum has swung far too far in the direction of restrictions.

we are not at historic norms. and it is a good thing we are not landing and there should not be lending of the pre-2007 period. , we willatory stance have to deal with these problems of first-time homebuyers and the ability to access some ownership. joining us from philadelphia. professor, it is always a pleasure to have you on the broadcast. thank you for joining us today. the overall u.s. economy is looking better. the fed is planning an end to its stimulus and yet treasury yields are still falling. what is going on? join me to explain, lisa abramowicz of bloomberg news. investors keep on buying news, why? cause if you're going to retire , and you'ret thinking, where can i go to be safe? it used to be bonds.

last year, everybody's idea of ons safety had turned on its head because everyone was expecting the ted to start tapering the stimulus and all the sudden find yields -- bond yields -- failedates rise, it is a investment. >> this year, they have done the opposite. they have gone back to those safe ons. the 10 year treasury has done very well this year. the investment corporate bonds funds have done very well this year. people are going back to the broad, index funds. people are saying, look, yes, we understand that fear. that was last year's fear about rapidly rising rates. this year, we don't see the potential for that happening as much. maybe this is the place to go. where else are you going to go? the thought processes for investors now, what are they saying, what does this mean, of their interpretation going

forward? >> it is pessimistic. if you think about it, if you are expecting yields to remain low for a longer time, what that means is they do not expect inflation to take off in a cost theay if it will federal reserve meaningfully. they do not expect the engine to take off as they were expecting last year. so it is actually really a bearish view of the world right now. >> in the near-term, how can the yearr will they affect 10 rates? what can they do? >> it is a good question. there is a debate going on right now, which is can the fed really influence the 10 year rates in a massive way? >> do people feel like they have more control than they really do over this? >> it is a fair question also looking at what is happening with the central bank. they are potentially going to start more stimulus, which could suppress yields even further in that region. there is a question of whether it will go back in the session.

the german boonies back down below one percent for the first time ever. that affects rates in the u.s. you have got to imagine, if you are in germany, would you accept less than one percent for a country that is in a questionable economic condition? they just had a negative quarter . or would you go to the u.s. and on the same rate maturity bonds? >> what do investors want to hear from janet yellen when she speaks tomorrow? what will she say to allay their fears? >> what is the fear? i guess the big issue, she has made a big issue about wages. growth has not been sufficient and that we really need to normalize even more. she has been dovish in that way. people are expecting her to really continue to that. at the same time, there is clearly a sense there is dissent and a sense that they want to get it going already to normalize policies and they are concerned about the fact that

the asset bubbles -- they are doing more damage than good at this point. what do people want to hear from them? sortbly that things stay of on course. they are still thinking about hiking. i feel like the market did respond a little bit yesterday to a little more hawkish language in the minutes. but even that, today, the yields are back down. >> the yield right now, 10 year, at 2.40%. 24 hours from now, janet yellen speaks. where is it going to be? [laughter] mark ie 2.39% question do not know. what do you think? >> i think we will wait until tomorrow. i will not be retiring before 3:00. still ahead, can the family from springfield bring in the ratings for cable networks? see why love for the simpsons

could not come at a better time. get your popcorn ready. they will be on for 12 hours. we will be right back. >> i noticed the refrigerator was cold. ♪

>> it is time now for today's latin america report. marina began her campaign as the socialist party's presidential candidate by criticizing an incumbent's management of latin america's biggest economy. she also pledged allegiance to his issues taken by her predecessor. a week after he died in a plane crash, she was chosen to take .ver his candidacy a u.s. judge frustrated by argentina's refusal to comply with his orders is being urged to take stronger action against the nation. is scheduled for this

afternoon at 3:00 p.m. new york time. the judge has been asked to issue a contempt order. they say the move is warranted because argentina plans to make payments only to bondholders who swap their bonds for less so -- lesser value. worth 1.5 funds are billion dollars. that is your latin america report for this thursday. it is one of television's longest-running strip -- scripted shows in tv history. "the simpsons" is moving to tole television with fxx kick off a 12 day long marathon with every simpsons episode ever, including the movie. matt miller, i know it is 12 days, and i said 12 hours by mistake. olivia sterns looks into the numbers around the series and what the payoff is for investing in syndication. one word -- huge. >> 12 days, not 12 hours. it has been going for 25 years.

that is three years more than you have been with bloomberg news. that is pretty incredible. >> when you put it like that. >> 552 episodes in total. i do not know how many episodes you have got for "bottom line." "bottomhave to say line" is probably not worth 12 go in dollars. most of the revenue for the simpsons franchise comes from ads. it also comes from a ton of lsney in merchandise, bart dol and sweatshirts. dvd sales also lucrative. this is a great deal for the channel, fxx. it is a comedy network. this will be the anchor for the syndication. hit ofto nail the new the season and have a fresh new program. but really, you need to have syndication as an anchor to bring in the new vic -- a new viewers who want to have a mix. >> how much is fxx paying for

this? >> rumored to be $750 million. --the simpson keeps on going the simpsons keeps on going, it'll be 22 billion dollars. but who are the losers here? pay-tv companies like netflix. netflix invented binge watching. here comes "the simpsons" with a 12 day binge watching. also, probably netflix is upset because the simpsons has a male primede, the demographic to watch video on demand. another thing to remember about this deal is it is not just the rights to view the simpson's on tv. it is a fully digital deal, video-on-demand and streaming on the internet so you can watch the simpsons on your tablet, your pc, or your phone. >> we have got to start a campaign. who knew.

olivia sterns, thanks. we will take a quick break and check in with trish regan for a look ahead at "street smart" at the top of the hour. we will be right back. ♪

>> "street smart" with trish regan comes up at the top of the hour and she joins me now with a preview. earlier today, you spoke to eric schneiderman. >> about the almost $17 billion bank of america is paying. a record fine. i talked to him at length about it. we had an interesting conversation because some of the things i asked him about, you know, he may not have entirely wanted to deal with. for example, the question about what critics have said, is this really fair that you are targeting bank of america at its

time this many years after the fact? >> they said you're mike came out. -- your mike came out. covered, newround york and california will get this money. >> new york will get $800 million but a lot of people have raised the question whether or not eric schneiderman -- rather, whether the government in general should be going after bank of america given that in 2008, we all needed bank of america to take over merrill lynch. if they had not, that would have been a big issue. of the is a part discussion. we will get into that issue and address all of that. also, we will talk about the ncaa and whether or not they really need to pay out more. played withker who lawrence taylor. that is coming up at the top of the hour. thank you so much. stay with us. we will have another check of

the market movers after the break. ♪

>> get the latest headlines at the top of the hour on bloomberg radio and streaming -- bloomberg radio and streaming on your tablet and on bloomberg.com. i am mark crumpton in new york. thank you so much for joining us. "on the markets" is next. i will see you tomorrow. is 56 past the hour, which means bloomberg television is on the markets. i am olivia sterns. let's that you caught up with where stocks are trading right now. the s&p within 10 points of 2000, trading right now near a session high. but we did get better-than-expected data out earlier this morning, showing. -- jobless claims on a weekly basis fell more than forecast. all eyes are on jackson hole. the fed conference underway. here to break down what the markets are watching is the head of fixed income. makes a prepared speech tomorrow. the title is "labor markets."

what is the most important thing for you? what do you want to hear janet yellen say? >> i want to hear her continue to be as dovish as she has been. we have got a favorite there. so i think rates are not going to hold out lower nomad or what she said. the minutes yesterday were something that was very interesting in the way the market reacted to those minutes. a lot happened since july 29 and 30th. i am not sure what the market was reacting to was current data. it is also assumed many of the to thebers want to go tightening direction and that is not case either. i am looking for janet yellen to give some clarity to her position as we go into the next month. >> because you think there are members of the fmo see who are breaking ranks and want to raise rates and it is not as uniform as the minutes indicate yesterday?

>> i think that is clear it is the case. they have been public about where the fed has been now. she has been a little more reserved and a little more, let's wait and see on how the labor markets perform as we go into the next phase. a absence of inflation or limited economic growth, it is really all about jobs. if the jobs are not quality jobs traded in a certain way, why raise rates then? >> you said you are long bonds, not a loan there. that is where we have seen the biggest money slows in the past year. that does not dovetail with the economic it -- recovery. what is going on? s&p is always that 2000 and we are seeing such a suppression on the long end? >> if you look at the market globally, there are not many places to put your long bond money. you compare the u.s. 10 year or the 30 year against france, against germany, against even italy and spain, which were

nearly gone three or four years ago, and there is a widespread there. what i would get is are you be the safest credit in the world. >> so u.s. debt is a steal at these levels. >> it is not a steal, but compared against a one percent german 10 year and look at the global markets in the economy, why wouldn't you? >> seven percent now, below u.s. 10 year. kevin giddis, thank you for joining us. "street smart" is up next on bloomberg tv. ♪

but we've got stocks in the green for the fourth straight session. starts right now. ♪ watching the most important hour of the session. the final countdown with 60 minutes to go until the close. bank of america slept venice toward fine, nearly $17 billion. storedped with an is